Correlation Between Lingsen Precision and KYE Systems

Can any of the company-specific risk be diversified away by investing in both Lingsen Precision and KYE Systems at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lingsen Precision and KYE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lingsen Precision Industries and KYE Systems Corp, you can compare the effects of market volatilities on Lingsen Precision and KYE Systems and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lingsen Precision with a short position of KYE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lingsen Precision and KYE Systems.

Diversification Opportunities for Lingsen Precision and KYE Systems

0.51

Correlation Coefficient

Lingsen Precision  KYE Systems

Very weak diversification

The 3 months correlation between Lingsen and KYE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lingsen Precision Industries and KYE Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYE Systems Corp and Lingsen Precision is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lingsen Precision Industries are associated (or correlated) with KYE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYE Systems Corp has no effect on the direction of Lingsen Precision i.e., Lingsen Precision and KYE Systems go up and down completely randomly.

Pair Corralation between Lingsen Precision and KYE Systems

Assuming the 90 days trading horizon Lingsen Precision Industries is expected to generate 0.66 times more return on investment than KYE Systems. However, Lingsen Precision Industries is 1.51 times less risky than KYE Systems. It trades about -0.08 of its potential returns per unit of risk. KYE Systems Corp is currently generating about -0.09 per unit of risk. If you would invest  1,790  in Lingsen Precision Industries on December 27, 2024 and sell it today you would lose (120.00) from holding Lingsen Precision Industries or give up 6.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Lingsen Precision Industries  vs.  KYE Systems Corp

Lingsen Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lingsen Precision Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

KYE Systems Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KYE Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lingsen Precision and KYE Systems

The main advantage of trading using opposite Lingsen Precision and KYE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lingsen Precision position performs unexpectedly, KYE Systems can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KYE Systems will offset losses from the drop in KYE Systems' long position.

The idea behind Lingsen Precision Industries and KYE Systems Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.